PAC 2015-16

[Extract]Deputy John Deasy: I have a question which is a follow-on from what Mr. Cody said. I refer to the World Bank grading system as far as ease of paying taxes is concerned. This has come up previously, and it is something I know is taken very seriously by companies located here.

If we are the best in the European Union and the sixth best in the world when it comes to ease of paying taxes, are there any measures we still need to introduce that would increase that number? It has come up, and if one reads surveys of companies that are here, American companies in particular, it is certainly a big issue, more so than some people would think.

Niall Cody [Chairman Revenue Commissioners]: The Deputy is right. We take it very seriously. We talked earlier about proposals that we will make to the Department for changes in systems, but technology is critical. Our Revenue online system is the vehicle through which it is easy to pay and easy to administer, but we are not complacent about it.

We have processes in place. We are introducing shortly an electronic tax clearance system which will be available online, for which one will not have to apply. One will be able to look at it. Every year-----

Deputy John Deasy: Will that reduce time?

Niall Cody: One will be able to see one's tax clearance virtually there and then.

Deputy John Deasy: Right.

Niall Cody: In 2012, we fundamentally reorganised relevant contract tax to an electronic platform, which took over 1 million pieces of paper out of the system. We have a schedule of developments to make it easier to pay. To move up from best in Europe will present particular challenges because a number of the countries ahead of us do not have-----

Deputy John Deasy: I know where Mr. Cody is going with this. It might be impossible to get beyond five or six.

Niall Cody: It is really difficult. Some of it is the Gulf states, and short of abolishing certain taxes-----

Deputy John Deasy: So the World Bank probably should have a different scale for-----

Niall Cody: I think it is comparable. People understand perfectly the ease of paying tax in the European Union. That is the kind of standard. Similarly, a provision that is overlooked in some of the comparisons is the ease of carrying out customs transactions. We are up there on that one, which is really important.

We have spent a lot of money on an electronic manifest system which allows the electronic reporting of the manifest to facilitate the movement of goods. The Chairman talked about speaking with the trade.

We engage heavily with the trade, advisers and business interests on improving the system of doing it. We are quite proud of our record. We were an early mover in electronic filing, and we are constantly looking at enhancing the system.

Deputy John Deasy: The Chairman should stop me if I am repeating what he or anyone else has said, but I wish to ask a question about what members have been dealing with in recent weeks, which is Ansbacher...

The only question I was going to ask was whether the chairman of the Revenue Commissioners has received any information since his last appearance that would lead him to believe that Revenue missed anything in its initial or historical investigations?

Mr. Niall Cody: -----certainly, while I obviously knew we would not be going into it in any detail, in the past week I reviewed the transcript of Josephine Feehily's attendance in December.

In her preparation for that, because obviously she was retiring, I attended the various briefing sessions on that subject and, just as she was satisfied, I am satisfied that we followed through just as we would follow through on any other information we get.

Moreover, as I noted in respect of the HSBC stuff, with regard to the principal officer who has led our investigation of that portfolio, and his predecessor, I certainly would not like to tell him he should not follow through on that.

Were I to do so, he probably would be writing to members himself. It is really important to state that the professionalism of the people who are dealing with this has been lost a little bit in some of the discussions. I note that Ms Feehily did state she had never experienced any interference in doing the job, and I believe her.

Chairman [Deputy John McGuinness]: Yes, but arising from that, some of the questions that are asked here are asked of the Chairman out of a desire to be reassured or to reassure the taxpayer.

Niall Cody: Absolutely.

Chairman: That is an important part of it as well.

Niall Cody: I agree completely.

Deputy John Deasy: Neither Mr. Cody nor his organisation appears before the committee very often, but this is talked about on a constant rolling level both in the media and in here. Once the chairman appears before the committee, it is important to have clarity, a real definite view and a standpoint when it comes to the investigation about which members seemingly are talking constantly.

Niall Cody: Earlier, I outlined the legacy special investigation and the €2.74 billion that we followed through on. All those leads and pieces of paper were examined with the same rigour and have been followed through.

PRELUDE [Extract]Chairman [John McGuinness TD]: Item 3A.4 is correspondence, dated 5 June 2015, from Mr. Jim Breslin, Secretary General of the Department of Heath, regarding an investigation into abuse of people with disabilities in a foster home in the south east.

It is to be noted and published . . . There are HSE issues regarding the foster home that was being investigated. I express my absolute dismay that the gardaí who have come back to me directly have said that there may not be prosecutions owing to insufficient evidence and so on. I find it absolutely appalling and it needs to be discussed again by the committee.

In the course of the replies from the HSE there are issues about those who were employed to investigate and the committee needs to revisit the matter. The correspondence mentions that the HSE spends €40 million on legal fees and we need to investigate that.Deputy John Deasy: The committee has dealt with the foster home issue. We need to remember that the Garda investigated all this in the early 1990s and no prosecutions resulted. The fear I and other committee members had was that it would be repeated.

For that reason there was an imperative on Government to take the review or investigation process very seriously. That was what the committee was asking the Government to do. I believe the Government is about to make a definitive decision not only on the course of action the Department will take, but also on the policy issues that arise from the contents of the report we will submit to it.

Perhaps we should hold off for a week or so. I always had the fear, which I expressed, as, I believe, did the Chairman, that it was going to be very difficult for the Garda because of the timeline involved and because most of the individuals who were affected were non-verbal. Some of the people involved have died since these issues arose. However, we need to wait a little longer because those decisions are being made right now.

Chairman: That is why I am saying we will revisit this batch of correspondence, which covers a considerable amount of ground.

[Extract]Deputy John Deasy: Regarding rent supplement and fraud, I will refer to the different schemes and payments. Every now and then there is a news story about the Department tackling fraud and saving hundreds of millions of euro.

I believe that gives people an impression that there is a massive amount of fraud taking place but, to be clear, when we compare some of our schemes to the fraud levels in the United Kingdom rent supplement schemes it seems they are higher, not by much but they are higher.

Those are the figures I have seen. How does Ms O'Donoghue respond generally to the notion that there is rampant fraud in the social welfare system? She knows the corresponding figures for different jurisdictions.

Is it a fair statement to say there is rampant fraud in the social welfare schemes? There will always be a certain percentage of it but is the fraud in some schemes worse than others?

Ms Niamh O'Donoghue [Secretary General, Department of Social Protection]: I would absolutely disagree with any suggestion that there is rampant fraud in the social welfare system.

It varies from scheme to scheme depending on the nature and type of schemes involved. One of the things we do in the Department is categorise schemes into high, low and medium risk, and the high risk schemes are the ones on which we wish to spend most attention.

But in terms of international comparisons, there is no evidence to suggest that the level of fraud in Ireland is out of kilter with the level of fraud anywhere else.

I refer back to my opening statement. The evidence points to the fact that the vast majority of social welfare claimants are receiving the payments to which they are entitled, so fraud is not an issue. What we are looking at is a very small number of people who are engaged in activity, and it is our job to try to minimise the opportunity for that.

Deputy John Deasy: With regard to rent supplement, the figure I have for estimated fraud is 2.9%. The rent supplement survey established that cases paid directly to the client had an 18% rate of fraud and error while those paid to a nominated person, in other words, the landlord, had a 10% rate of fraud and error.

Has the Department considered making that payment directly to the landlord to minimise that differential as a condition of the scheme?

Niamh O'Donoghue: This is something that has surfaced on many occasions and the view of the Department always has been that the contract for rent supplement is with the claimant.

The rent agreement is between the claimant and the landlord, and it is only at the request of the claimant that we would directly make the payment to the landlord.

The real issue is a control issue for us in terms of following people through, getting communication in terms of change of circumstances or change of address, and tracking whether people are in particular locations or not.

Rent supplement was never intended to be a long-term scheme. The intention is that, over time, people who have a long-term housing need will move, in the first instance, into the housing assistance payment, HAP system, which is now up and running, and then, prospectively, into other social housing if that is a better option for them.

That is an entirely different contractual arrangement and method of payment, which probably offers better security to the State.

John Deasy: I think all Deputies got this literature in their pigeon holes this morning.

Niamh O'Donoghue: Yes.

Deputy John Deasy: What motivated Ms O'Donoghue to print this?

Niamh O'Donoghue: It is to make people aware that there is such a protocol in place and that if there is a danger of homelessness, there are arrangements in place to deal with that. It seemed, certainly from recent publicity, that this may not be as widely known or understood as we would wish it to have been.

Deputy John Deasy: Is the Department coming across that? Obviously, there was a tangible reason within the Department for this-----

Niamh O'Donoghue: We now have almost 2,000 people who are in rent supplement arrangements under this tenancy sustainment protocol, which allows for particular circumstances to be taken into account in determining the rent to be paid.

That has been a hugely effective operation in working with the local authorities and Threshold. Obviously, however, there is still publicity concerning people at risk of homelessness and calls for rent supplement ceilings to be improved or increased.

We really just wanted to make people aware that this facility, this flexibility, does exist where those circumstances prevail, and 2,000 families have already availed of that.

John Deasy: I have one final question, on the Department's definitions with regard to customer error and fraud. I read the definitions. The specific difference, I suppose, is that where somebody provides information, it is deemed fraud if there is in the opinion of the Department an intention to provide false information.

Consider the customer error rates in the various categories. With regard to the jobseeker’s payment, customer error was identified in 119 of the cases assessed. That is quite a large figure. Fraud was suspected in 21 of the 987 cases assessed.

When it comes to rent supplement, that figure is down to 55. Someone might play devil’s advocate with regard to the Department's definitions and its interpretation of those definitions when it comes to the question of fraud versus customer error.

It is a fine line, in many respects, and the interpretation involves a judgment call by the actual social welfare officer. Are there increases across the board in customer errors based on the Department’s assessments? Does the figure remain the same? Are the ratios stagnant?

"Has the rate of customer error gone up? It is subjective. One man's customer error is another man's fraud."

Niamh O'Donoghue: The trend in recent years is that the proportion of overpayments raised due to suspected fraud has been increasing rather than customer error. Thankfully, the proportion attributable to departmental error has been decreasing, which is also welcome. Obviously, it is not something we can be complacent about.

The Deputy is absolutely right that it is a subjective judgment, but it is a judgment made by a deciding officer having regard to the entire set of circumstances by which something arises. The level of previous engagement with or the case history of the individual concerned is also taken into account before the judgment is made.

Deputy John Deasy: Has the rate of customer error gone up? It is subjective. One man's customer error is another man's fraud.

Niamh O'Donoghue: Yes.

John Deasy: Across the board, has the rate of customer error in the various schemes increased?

Niamh O'Donoghue: Perhaps I could give the Deputy some figures. In 2013, of the overpayments raised, 34% were considered to be attributable to customer error. In 2014, it was 40%. So far this year — this is very preliminary stuff to the end of April 2015 — it is 38%.

We have significantly improved our investment in the training of deciding officers, and we have also put in place a fairly sophisticated new system of debt recovery and assessment, which means we are raising overpayments in a much more timely way.

Decisions are being made much closer to an event occurring rather than at some time prospectively. That probably improves the consistency with which things are defined.

John Deasy: We have invested and are proposing to invest an awful lot more money, €17 million or €18 million, in the public services card. Has that made an appreciable difference with regard to fraud, as Ms O'Donoghue sees it?

Niamh O'Donoghue: Absolutely. There is a fixed cost associated with the public service card. We are in a contract, the value of which is €24 million. That is based on a presumption that we will issue 3 million cards by the end of 2016. To date, we have 1.4 million cards issued.

Obviously, this has been a progression in terms of ramping up our capacity to issue public service cards. What has happened is that somewhere in the order of 62 cases of fraud have actually been identified through the face-matching software that is associated with the public service card.

Equally, the public service card has contributed very significantly by virtue of us engaging with customers and inviting them to come in to be registered-----

John Deasy: Is Ms O'Donoghue saying that those 62 cases would not have been uncovered had the technology not been introduced?

Niamh O'Donoghue: I cannot say definitively that they would never have been uncovered, but let us say that the technology allowed us to uncover them very quickly. Very serious cases were identified that have gone through the courts, and custodial sentences have been handed down.

It also has a secondary effect. We have been inviting people to come in, and we now have the legislative power to suspend or stop a payment if somebody does not engage with us. On foot of that, somewhere over 200 payments have been stopped by virtue of people not attending, having gone through a whole range of natural justice processes to enable them to attend to be registered.

We really feel that it has contributed enormously on the fraud side, as well as the customer service side. Close to 400,000 people now have a public service card with the free travel badge on it, which provides much greater security to transport providers in relation to providing a service to people who are actually entitled to it.

John Deasy: With regard to the money we have invested and are proposing to invest, I believe Ms O’Donoghue said 3 million cards are to be issued by the end of 2016.

Niamh O'Donoghue: Yes.

John Deasy: Is this going to save an appreciable amount of money?Niamh O'Donoghue: I would think so. I could not quantify precisely the fraud impact but the evidence to date is significant. The figure is certainly in the millions. Obviously, it has an ongoing effect and a huge preventative role.

Since people have to go through the registration process, they may be less inclined to try to perpetuate identity fraud. They may be less inclined to try to make multiple claims when they know we now have the infrastructure to check who they are.

Obviously, the card also has the potential to be of far greater use in a public service context. We are working with a range of Government Departments and organisations to make sure that becomes a reality, too, particularly in terms of online services. This is because we have the infrastructure to allow identity to be authenticated through the card.

[Extract]Deputy John Deasy: I turn to a broad issue within the Department which is the turnaround time from application to payment. I know from my own office that it is taking a great deal of time.

The one we point to most is the invalidity payment. These are people who have made contributions and worked and we estimate that in some cases it takes approximately 18 months from the time an application is made to payment. It is too long.

Obviously, there are a range of waiting times for the different payments that the Department has figures on. It knows the averages. It is not getting much better in our opinion from our anecdotal experience in the office with regard to the people we deal with when it comes to applications, assessments and the wait to final payment. It is something I have raised before but we have not seen any improvement.

Ms Niamh O'Donoghue [Secretary General, Dept of Social Protection]: I am sorry to hear that. It does not accord with what the data are telling us in the Department. I would be very happy to explore the particular issues with the Deputy or to give him more detailed information on this rather than to take too much time on it.

I accept entirely that the figures here are average processing times, but on invalidity pension the average processing time currently is 10.7 weeks.

We should bear in mind that invalidity, in common with a number of other schemes where there is a medical component, has an additional processing time. As the Deputy has correctly stated, invalidity is an insurance-based scheme and is based on a person having a contribution history but who also must meet the medical criteria.

Currently, 10.7 weeks is the average from application to what we call a "clean award". What I mean by that is the first decision to award. There is no doubt in relation to quite a number of medical schemes that initial decisions might be negative and reviews or appeals might then be looked at through which in most instances additional information is provided which, in turn, often allows for a positive decision to be reached.

There are many instances of that. The experience of the Deputy seems to out-lie what the national figures are telling us and I would be very happy to look at it for him.

John Deasy: It is fair enough that those are the Department's data. I am just saying it is not our experience. I will collate the instances I have and give them to the Secretary General. I understand what she is saying, which is that outside of the appeals process, it is two and a half months, whereas my estimate is a great deal longer.

Niamh O'Donoghue: There are a number of things we have done. In the last two and a half years, we have placed a huge focus on dealing with backlogs, which were very significant in a number of different scheme areas, including carer's allowance, disability allowance, invalidity pension and FIS.

We put a great deal of effort into trying to improve those processing times and made huge inroads. Very significant inroads were made such that the level of service has improved dramatically from what I will be the first to admit was an unacceptable level.

If the Deputy's experience or the experience of the people he is hearing about constitute significant outliers to the figures I have mentioned, it means there is some issue at play. It may be in relation to the information being provided, but I would be very happy to have a look at it and come back to the Deputy.

John Deasy: As far as the different payments and schemes are concerned, where are the largest backlogs and the worst delays from the time someone makes an application to payment?Niamh O'Donoghue: I can let the Deputy know that in one moment. In terms of average times, the latest processing figures we have indicate that some of the most significant areas are widow's contributory pension and child benefit where the child benefit is being claimed under EU regulations.

John Deasy: How long is it for widows?

Niamh O'Donoghue: That is showing at 28 weeks currently. There can be issues in regard to that, ranging from people not completing forms correctly, not responding to requests for further information, not providing all the detail we ask for and, particularly in the context of the illness payment, not giving us sufficient medical information that allows for a decision.

John Deasy: A person has to wait six or seven months for widow's contributory-----

Niamh O'Donoghue: Yes, but as I said, that is an outlier. It can be as much to do with the circumstances of the particular scheme.

John Deasy: Fair enough. Every application has its own peculiarities in many respects. Looking for financial or medical records can get very complicated. Has the Department had any success in improving the wait times when it comes to widows? Is it getting worse or better?

Niamh O'Donoghue: That is one that is currently flagging as a problem area, so we will be looking at that. In all the other scheme areas where we have problems we have made significant improvements. That has been the trend over the past number of years.

Mr. Seamus McCarthy: Can I make a comment on that, and it might be something the committee could look at? There is a notification for people. It is a widow's contributory pension, so it occurs after an event when somebody becomes a widow.

Niamh O'Donoghue: Yes.

Seamus McCarthy [Comptroller and Auditor General]: There is not any conversion from other schemes, or does that arise in many of those cases?

Niamh O'Donoghue: It can arise. Obviously, if the person who died was a recipient of a primary social welfare payment, once we are aware that the person has died we would then initiate contact with the spouse for application, but I can have a look at that specifically and furnish information showing the reason for that.

It is flagging as a problem at the moment. It would not previously have flagged as a problem so there is obviously a particular difficulty at the moment for us there.

"The public is listening to us and everything in the country has supposedly changed. However, while we have not concluded our banking inquiry into what happened seven or eight years ago... technically, what is worse in governance terms is that we are holding an inquiry into a bank that we owned."

Deputy John Deasy: I welcome Mr. Moran and his officials. I understand he was only appointed in July 2014, but I wish to refer to some historical issues on which we need answers because this is the first opportunity Department of Finance officials have had to respond to parliamentarians directly on these issues - Siteserv, in particular - the timelines involved and the issues that have arisen.

Mr. Moran may delegate as necessary to provide responses to the questions. Although he may not have been the person involved in the meetings, we need clarity on the issues involved, notwithstanding the written responses we have received from the Department in recent days.

I will start by asking questions about the Siteserv shares. Media reports in the past couple of months have suggested there was a sudden spike in Siteserv share activity between November 2011 and February 2012.

I find it curious that it took a request from a Member of the Dáil to the Office of the Director of Corporate Enforcement to initiate a potential investigation into issues that might have arisen from the sudden spike in share activity.

When the Department read media reports on an organisation, of which it had oversight through IBRC, which was in effect sold by the State, what did it do? Did it make inquiries about the share prices and activity reported in late 2011 and early 2012?

Derek Moran: I have brought with me Ms Nolan and Mr. Reid who are more familiar with this issue. I would preface any comment by saying I am anxious to assist the committee on this issue and that we provided a comprehensive background document for the committee on Tuesday evening.

I am also conscious of the review of the transaction being carried out by the special liquidators, assisted by Mr. Justice O'Neill, which needs to take its course. Therefore, we will stay away from the transaction and its details and talk around the framework and the relationship.

On the alleged spike in share transactions, the monitoring of share transactions is a matter for the Stock Exchange which does not fall under the aegis of the Department. Where there is suspicion of anything happening along the lines the Deputy has described, the Stock Exchange is obliged to communicate with the Office of the Director of Corporate Enforcement.

Deputy John Deasy: Let me stop Mr. Moran. The public is listening to us and everything in the country has supposedly changed. However, while we have not concluded our banking inquiry into what happened seven or eight years ago, we are now finding that we are conducting another inquiry into a bank we own.

Somebody might ask the question: "What is worse governance wise?" Was what happened in the 2000s in banks we did not own and of which there was no oversight and regulation worse? The answer is that that was worse, given the devastation caused to our country and people. Technically, though, what is worse in governance terms is that we are holding an inquiry into a bank that we owned. That is how I will premise my comments.

If the Department of Finance technically does not have a remit over the investigation of alleged insider trading, I am not sure whether it is sufficient to assert that that was not the Department's job. The Department had oversight of IBRC. The State owned it.

When the media reported an alleged spike in share activity, did anyone in the Department contact the Stock Exchange, the Garda or the Office of the Director of Corporate Enforcement, ODCE? If the answer is "No", we have a problem. If someone robs my house, I go to the Garda and make a statement.

A Deputy has made a request of the Director of Corporate Enforcement. His office's answer was that it wondered whether it had a remit in this area. We have an issue with the process when it comes to the investigation of alleged insider trading. The answer to my question is that the Department did not contact anyone about an alleged spike in share activity. Is that the case?

Derek Moran: It is important to get the timelines right. My understanding is that the alleged spike happened several months before the transaction was executed or during the run-up to the transaction. The Department had no visibility of that transaction until after it had happened.

Deputy John Deasy: I know that. That is fine. I am talking about what has been reported on in recent months. Does Mr. Moran have any opinion at all about what has been reported?Derek Moran: Opinion does not matter. We are talking about a spike in a transaction-----Deputy John Deasy: Yes.Derek Moran: -----that happened before the Department had any sight or knowledge of that transaction. This was an issue to be monitored by the Stock Exchange and reported to the ODCE if the former saw a problem. It is alleged. I do not know what the evidence is.Deputy John Deasy: Does Mr. Moran know what? I am talking about the process. We have a problem. Compare this with the US Securities and Exchange Commission, SEC, which is a law enforcement commission, has an enforcement division and prosecutes civil cases before courts.

It is unclear what happens in Ireland where there is an allegation or report, but the SEC acts on media reports. If it reads something about the industry in The Wall Street Journal, it acts on it. The Director of Corporate Enforcement's response in a news article was that his office "did not receive any requests from any other regulatory authority asking us to commence an investigation" into Siteserv share trading.

This begs the question of what the office needs. Is it a papal bull from the Vatican? I do not know what initiates an investigation. If the Department of Finance has no interest, we have a serious problem.

The problem with the Stock Exchange is that it is owned by stockbroking firms. Someone might ask whether it is in the public's interest for them to have responsibility and remit for initiating an investigation. Is this a fair analysis or point to make?

It is unbelievable that, if something like this is reported in the press, the Department of Finance does not have an opinion or will not ask even basic questions of the bodies and agencies that have a remit for alleged insider trading. Is this not even remotely reasonable?

"This begs the question of what the office of Corporate Enforcement needs. Is it a papal bull from the Vatican?"

Derek Moran: The regulation of the market is a matter for the Stock Exchange and, where there are irregularities, to report to the ODCE.

These do not fall within the remit of the Department. I just want to be clear on that. The alleged spike happened before the Department had any visibility on the Siteserv transaction.

The response to the suggestion that there were irregularities was to make available the share register. To date, this is still an allegation of which I am unsure there is any evidence. Do my colleagues wish to speak?Declan Reid: We are not aware of any evidence that has been brought forward other than what we have read in the press. The share register has been made available by the liquidator of Siteserv for scrutiny.

Deputy John Deasy: Mr. Reid is the person in the Department who would deal with this matter.

Declan Reid: Now, but not at the time of the transaction.Deputy John Deasy: Has Mr. Reid or any of his predecessors contacted the Stock Exchange or the ODCE regarding this issue-----Declan Reid: No.

Deputy John Deasy: -----to find out whether they are looking into it? I am not asking whether Mr. Reid has evidence. I am asking whether anyone in the Department of Finance, which had oversight of transactions involving IBRC, picked up the telephone and called these organisations?

Declan Reid: We have not contacted them directly to see whether they have conducted an investigation, but they have come out in response to parliamentary questions of which we are aware and stated their positions.Deputy John Deasy: Does Mr. Reid not have any human curiosity about a matter over which he has responsibility on behalf of the public and into which he might make initial inquiries?

Before Ms Nolan speaks, I find it unbelievable that someone from the Department of Finance would not pick up the telephone if there were several reports about a spike in Siteserv's share activity, given what has been in the media in recent months.

The response from the ODCE was equally amazing. The office made contact with "a number of other regulatory authorities with a view to seeking to establish as to whether any issues arise that might come within remit". It did not even know what its remit was in this situation.

The Stock Exchange is responsible for monitoring any suspicious trading, but we are none the wiser as to whether it has conducted a preliminary inquiry or investigation. It passes its files to the ODCE, which then investigates any alleged breach in company law. Is it not always the case of something being someone else's job? This must change.

Given what the country has gone through in the past ten years, surely the Department of Finance would have some interest in finding out whether someone or some agency or body was examining what has been reported. This is reasonable, fair and simple. Does Ms Nolan wish to respond?

Ann Nolan: The reality is that we do not have any evidence that there was a spike, never mind evidence of wrongdoing, but I agree that it is for the Stock Exchange and the ODCE to investigate such matters.Deputy John Deasy: Does any of the witnesses have an opinion on whether the procedures in terms of alleged insider trading are appropriate?

Ann Nolan: Insider trading is in no way appropriate. A number of changes to the procedures are upcoming. We are examining the market abuse directives. We expect there to be changes in the next 12 to 18 months in that regard to bring the entire matter under the Central Bank rather than the Stock Exchange, which would be more appropriate than the current arrangements. We are working on that front.

Deputy John Deasy: I will leave it at my next comment on this aspect. The public will be amazed that the Department of Finance did not make even the most basic of inquiries of the ODCE, the Stock Exchange or the Garda into whether the issue was being examined, investigated or inquired into.

It is amazing. The witnesses might say that they were not there at the time, that this was not their job or that, statutorily, this was not an issue for them, but the public will not buy that any longer.

What Deputy Catherine Murphy asked in the Dáil was reasonable. This committee should make inquiries, as the issue relates to taxpayers' money. The Department of Finance held the opinion that there was potential for an awful lot of taxpayers' money to be lost, so a review was commenced.

It was concerned about an asset being sold for a price that was too small. The very least the Committee of Public Accounts should do is to inquire whether the Office of the Director of Corporate Enforcement has looked at the matter and whether it is inquiring into it.

We should echo what the Deputy asked for in the Dáil Chamber, if the Department is not going to do anything, and take it from there. It is unbelievable that the Department might not be prepared to make inquiries over the telephone, so the committee will have to do so.

I wish to inquiry about Siteserv. As I said earlier, this is the first time the officials from the Department of Finance have had an opportunity to respond to questions regarding Siteserv. They have given written answers to some of the questions we asked and, in many respects, the replies are comprehensive.

I will start with the date of the review conducted by the Department, which was a meeting with senior IBRC officials held on 11 June 2012. What prompted the review by the Department? What concern prompted the Department to seek a meeting on Siteserv?

Derek Moran: As I said at the outset, the timeline is important. The Department did not have visibility on the Siteserv deal. Critical to this issue is when we first had an inkling that there might be an issue.

We got a representation from a member of the public expressing concerns, and then there was a series of one or two parliamentary questions which brought up issues of concern.A routine monthly management meeting was held in April at which the question of alerting the Department was raised.

It was agreed with the chairman and CEO on 31 May that we would do so. It was in response to an e-mail from a member of the public, some press reporting and parliamentary questions. The review took place on 11 June, and Departmental officials and officials of the bank went through the various details on how the transaction was done.

The key element of concern was the first point that Siteserv led the sale and not IBRC - it was handed off to them - which gave rise to a range of other issues. It was those types of concern.

We listened to the response, and there were five issues, all of which flowed from the fact that the company was allowed to run the sales process: not opening the sale to trade buyers, entering into exclusivity with a single bidder, the payment, the quantum of the payment to shareholders, and certainly the suggestion of not accepting higher bids. That is what gave rise to it, and it was immediately afterwards.

We have looked at the records and we have searched thoroughly in the Department. There is no record of details of Siteserv being provided by the IBRC to the Department before April 2012.

Deputy John Deasy: The shareholding management unit has responsibility for the day-to-day relationship. Is that right?Mr. Derek Moran: Yes.

Deputy John Deasy: So, by June or July 2012, when it expressed a concern that the State had not recovered as much as it possibly should have, was that not a bit late in the day? What was it doing previous to that, at the time Siteserv was being sold? Has the Department asked the unit about what was disclosed?Derek Moran: Yes, I have.Ann Nolan: Under the relationship framework that was before that, the fiduciary duty of the interests of the State was held by the independent board which had been appointed by the Government after the takeover or nationalisation of the IBRC. We did not get involved. In fact, the relationship framework was designed in such a way that we would not get involved in the ordinary day-to-day activities of the IBRC.Deputy John Deasy: We now know that that design was extremely faulty, which led to a revised relationship framework. Is that fair to say?

Ann Nolan: I think-----

Deputy John Deasy: Is there an admittance or agreement that the unit was completely ill-equipped to deal with the relationship and communications from the IBRC and the Department of Finance, and that is why it resulted in a completely revised framework document?Ann Nolan: That would probably not be quite the full story. I want to be fair to all the people involved. At the time the bank was taken over it was a going concern, and the ordinary course of business was, of course, ordinary banking business.

It was, I think, August to September 2010 when we put the bank into wind-down. The ordinary course of business, in extent, changed because, at that point, they were then winding down. This type of transaction was not captured. It became an ordinary course of business and probably should have been captured.

Deputy John Deasy: We are getting to the kernel of the issue, which is commercial freedom-----

Ann Nolan: Yes.

Deputy John Deasy: -----and the kind of oversight that the State provided when it came to something that was owned by the public. As I said to the witnesses earlier, it is ironic that before concluding a banking inquiry into something that happened historically, we have initiated another inquiry into a bank that we did own.

I asked a question about the framework that existed initially. I understand what Ms Nolan is saying, but a lot of people have reached the conclusion that, regardless of the issue of commercial freedom, the State and the Department of Finance did not act accordingly in terms of the oversight of IBRC, and had to change the framework document subsequently. That is really what happened.

Ann Nolan: We changed the framework document when the nature of the relationship changed because the nature of the organisation changed.

Derek Moran: I wish to emphasise that point. The 2009 relationship framework was based on a company that was supposed to return to being a bank. Its normal trade was to be banking. That changed in the latter half of 2010, with a business plan being agreed with the EU in January 2011, after which it went into wind-down.

There was a provision in the original relationship framework that any material acquisition, disposal, investment, realisation or transaction other than in the course of ordinary business would be a reserved function of the Department. When it went into wind-down, such disposals became part of the ordinary business, and fell out. That meant the relationship framework was no longer the right one.

Deputy John Deasy: Fair enough.Derek Moran: They were not required to notify, and they did not.

Deputy John Deasy: The Department had an epiphany. I will read the note issued by the Department, which reads:We are concerned at the number of large transactions that have been poorly executed under the direction of the current CEO.The note refers to June or July 2012. What other transactions did the Department look at? What other large transactions was the Department concerned about in terms of the disposal of assets within IBRC? What else are we looking at here?

Ann Nolan: The list of transactions is in that same document. There is the Allsop transaction.

Deputy John Deasy: Right.

Ann Nolan: There was the engagement of Blackstone on an exceptional basis.

Deputy John Deasy: Is the Department looking at anything else?

Ann Nolan: No, I think that is an exhaustive list. Looking through all our other files we cannot find a reference to any other.Deputy John Deasy: This reference to a number of large transactions-----Ann Nolan: That is all we can find any record of. The individual who wrote that particular note is no longer with the Department and he has no recollection of any others.

Deputy John Deasy: Mr. Moran's predecessor, Mr. John Moran, met the CEO of IBRC. There are no minutes of that meeting. Will Mr. Moran give the committee an idea as to what was expressed on behalf of the Department?

Derek Moran: There are no minutes but there is a record of what happened at the meeting and it was largely a follow-up from the meeting with the Minister a fortnight earlier about improving the relationship and getting better oversight going forward, and that culminated in putting somebody from the Department into IBRC in a specific role.

There is a record, which has been released under FOI, from Michael Torpey recording John Moran's debriefing of that meeting, and that sets it out. Am I right in that?

Ann Nolan: Yes.

Derek Moran: The key was to follow up the items that were discussed with the Minister on 25 July. The main one was to action out the improvement of the oversight and the improvement of the relationships going forward.

Deputy John Deasy: When one looks at the Anglo Irish Bank Corporation Act 2009, it is pretty specific when it comes to the flow of information that should be going from the bank to the Minister and the Department.

It talks about any material acquisitions, disposals, investments, realisations or other transactions other than in the ordinary course of Anglo Irish Bank's banking business. In hindsight, was the Act followed?Ann Nolan: It depends on what one considers as the ordinary course of business and there was a difference of opinion at different times between ourselves and the board of the bank as to what constituted-----

Deputy John Deasy: As far as the interpretation of the Act?

Ann Nolan: The interpretation of the Act.

Deputy John Deasy: And was that made clear at the time?

Ann Nolan: The Deputy can see the documents that we had at that time. One of the other issues that has to be taken into account is the relationship-----

Deputy John Deasy: The suspicion is that it was not made clear. We will get down to the nub of this now. The suspicion is that the Act was enacted and the details within the Act were not followed through on and there was not a sufficient level of communication or inquiry when it came to the Department and the bank.

There is some reasonable evidence to suggest that the details of the Act and the spirit of the Act were not followed through on. Ms Nolan has said that she went back through the files. When it came to full access to information, does Ms Nolan believe now that there was a serious problem? I think the answer is obviously, "Yes," because the whole framework was revised subsequently.Ann Nolan: To go back to the framework, the reason the framework was written the way it was the first time was because that is what was insisted on by DG Comp, the competition authority in Europe.

We had no option but to allow commercial freedom to the bank and to limit our inquiries, and that was insisted on by DG Comp. One of the reasons the second relationship framework took a long time to negotiate was because DG Comp was reluctant to allow us to put in the kind of thresholds that would say certain documents would have to come to us.Deputy John Deasy: Is that the reason the revised framework was not implemented until March 2012?Ann Nolan: That is the reason.

Deputy John Deasy: Is that the only reason?Ann Nolan: In 2010 there were a lot of other things going on in the Department and the bank was reluctant to change it, but the main reason was that in March 2011 there was the recapitalisation of the other banks, the PCAR, and the burning of the bondholders during June and July, and there was a set of things agreed under the programme.

The question of the revised relationship frameworks came up in August when we had the other major bits done and they were discussed then between August 2011 and March 2012 and that is when they were put in place.Derek Moran: It is very easy to forget that this was an exceptional period. We were going into a programme and a general election. All conditionality that went with that programme had to be implemented as a priority for the release of funds.

In addition, the State was locked out of the markets. As Ms Nolan has said, the rewriting of the relationship framework became a condition of the programme after the third review. It was originally to be delivered by the end of December 2011 and it was not delivered until the end of the first quarter.

There was slippage on that. That was a relationship framework negotiated between us, the bank, the three members of the troika, and DG Comp. It was not simple. It was multi-party. To paraphrase what Ms Nolan has said, I think DG Comp wanted us to be even further away and more hands-off in our relationship with the banks rather than closer.

Deputy John Deasy: At a certain point the Department made a determination that Anglo Irish Bank was not forthcoming enough with regard to its decisions and transactions. Mr. Moran has said that the Department then decided to put an official in on the board to keep an eye on things. The board did not like it.

It begs the question whether it should have occurred much earlier. That is the issue. Therefore, we go back to Siteserv and other transactions, and we now have a public inquiry into whether the public achieved what it should have achieved through the sale of that.

The public did not expect the Department to fall down so badly so quickly after what occurred. The requisite scrutiny was not there. The Department changed it, effectively, at a certain point, but I do not believe that it was there. I think the Department fell down.

"The requisite scrutiny was not there... I think the Department fell down."

Ann Nolan: I would absolutely not agree with Deputy Deasy. The independence of the banks was an absolute prerequisite of DG Comp. It remains the issue that the responsibility for the running of the banks is a matter for the boards of the banks and we appointed a board chaired by Alan Dukes, a former Minister for Finance, a very capable man.

I have no evidence, to this day, that any of the transactions were wrong, but I accept that there are many questions about Siteserv. We had questions ourselves about Siteserv. We do not know the outcome of the inquiry. We have set up an inquiry to look not only at that but all of the other deals that that board did.

Deputy John Deasy: Ms Nolan's word choice is interesting - she has no evidence that any transactions were wrong. The Department of Finance would have a very clear opinion with regard to the amounts of money that were recovered from the sale of Siteserv, and the opinion of the Department of Finance was that it was not enough and that the State did not achieve what it should have.

That was, in effect, the opinion within the Department of Finance and that is why things changed. So when Ms Nolan says that there is no evidence of anything that went wrong, there is a clear opinion that came from the Department of Finance that things were not as they should have been.

Ann Nolan: No, I think the opinion within the Department of Finance at the time, and as reflected in those documents, was that there were aspects of that transaction that it was not happy with. There were aspects of it where we felt it was possible that a different set of actions could have brought a better solution.

The board told us and assured us and the Minster that that was not the case, that this was the best possible transaction. We have now asked the special liquidators under Mr. Justice O'Neill to inquire into that and look at all of the facts and establish whether or not they agree with the board.

Certainly, there were aspects of that transaction we were unhappy with. There is a big difference between that and suggesting that everything that that board did was wrong-----

Deputy John Deasy: I am not suggesting everything the board did was wrong.

Ann Nolan: -----or that there was huge-----

Deputy John Deasy: That is very unfair. Did I say-----

Ms Ann Nolan: Deputy Deasy said that the entire position-----Deputy John Deasy: Did I suggest that everything that the board did was wrong?

Ann Nolan: No, what the Deputy suggested was that everything that happened between the-----Deputy John Deasy: No. Do not put words in my mouth.Ann Nolan: I am sorry. I withdraw that completely. I apologise to the Deputy. I was not trying to challenge him in that way.Deputy John Deasy: KPMG and former Justice O'Neill are looking into all transactions that took place over €10 million. We are aware of that. What we are delving into here is how quickly a Department acts when it actually raises concerns itself.

The answer is - not very quickly. Regardless of the regulatory body dealing with this, there was an awful long time between the raising of the initial concerns and the establishment of the revised framework document.

Ann Nolan: I do not understand. The revised document was put in place in April 2012.

Deputy John Deasy: It was March.

Ann Nolan: Sorry, it was March 2012. That was before concerns were raised.

Deputy John Deasy: My point is that concerns were raised within the Department on the operation of the bank, which led to the revised framework document. Is that a fair point?

PRELUDE [Extract]Chairman: [John McGuinness TD]: . . . a number of reports were given to us by a whistleblower relating to Cork Insitute of Technology. I know this is a different matter but it is still part of the third level sector.

Then there were reports on Waterford Institute of Technology, there were problems in regard to the amalgamation of Carlow and Waterford ITs and Tralee and Cork ITs. Within what was said at those meetings, there were serious issues which have not been addressed in an adequate way.

We should not just remind the Department of Education and Skills but, if necessary, bring forward the date of our hearing with it if we do not get the appropriate replies. Extremely serious allegations were made but it seems to me that the Department has not taken them seriously.

In the context of the amalgamation of institutes at both Carlow and Waterford and Tralee and Cork, significant moneys are involved and the Department has not clarified the matter yet the amalgamations continue apace.

Again, it is a question of having the information before us, being able to make a decision and not allowing a process to continue that will further cloud the financial circumstances of the colleges involved so that we will never get to the end of the matter.

We should express our concern directly to the Department about these matters that have been raised. If we do not receive a comprehensive reply to the queries raised by members and whistleblowers, then we should have an earlier than planned meeting with the Department, the Higher Education Authority and representatives from the different colleges concerned.

Deputies could deal with the issues raised in the correspondence supplied by the Department at that meeting. The allegations are far too serious for this committee to ignore.

Deputy John Deasy: We should wait until Mr. Michael Kelly finishes his report. It might be more useful to have him in when we meet the HEA and the Department. I have spoken to him and he has agreed to meet the Committee of Public Accounts once he has finalised his report.

My understanding is that he is taking a look at some of the issues you raised as well. He has had to wait until the two governing bodies in Waterford and Carlow met and until they have been put together before he issues his report.

There has been a delay because of that and I believe that is reasonable. However, if we are asking in the Higher Education Authority with the Department of Education and Skills then I believe it would be useful to bring him in and discuss his report and findings as well, because he is examining the issues you have raised.Chairman [John McGuinness]: I have no difficulty with that, Deputy Deasy, save to say that what Deputy Costello has raised and what I have raised are almost separate from the particular issue of Waterford and Carlow ITs.Deputy John Deasy: Yes, that's grand.

Chairman: It is a broader issue of governance and reporting between the colleges and the Department, and, in turn, reporting between the Department, the HEA and the Committee of Public Accounts. It is obvious that we are not getting the information. It is clear to me that there is almost an attempt not to give us full information, and that is not acceptable.Deputy John Deasy: That is fair enough. He is probably the one person who has been tasked with independently reviewing the governance matters that you are talking about. Therefore, if we are going to have a meeting on the matter it might be useful to have him before the committee to talk about his findings when it comes to the governance and the stream of information between the Department, the Committee of Public Accounts and the HEA.

Deputy John Deasy: I will tag onto what the Chairman has mentioned and what Mr. Griffin spoke about with regard to the national broadband plan.

Mr. Griffin has only been in place for a year and a half and I have not had an occasion to question him at this committee. Leaving the historical issues behind, something which I believe will define his time as Secretary General will be how successful he is in rolling out the national broadband plan.

I wish to ask about the way it was announced and is being operated in the Department. Rural areas with smaller population densities, or with fewer than 900 people, are not seen as economically viable. We have what is called State intervention on one hand, and I hope the commercial operators will actually provide the crossover so we will cover 96% or 97% of the entire country by 2020.

The mapping process was published last November, pinpointing the geographical areas requiring State intervention. The public consultation process on the accuracy of the maps closed for submissions in February of this year.

In my constituency, it is estimated that approximately 29% of the entire land area will not be covered by the commercial operators. The area has 17,000 or 18,000 households. In the past four or five years, in particular, and for longer in certain locations, including coastal villages such as Bunmahon and in Kill, broadband is the major issue for people with businesses. People who want to start businesses cannot get a proper broadband service.

I understand that the Department was meeting telecommunications companies in February and March of this year. I want to find out how much on schedule the Department is with regard to rolling out the project.

How is it going? I understand Vodafone made its announcements yesterday or the day before. It is in competition with Eircom. How is this going? What is the timeline considering what the witnesses announced, and what is the current position?

Mr. Mark Griffin: The project is going very well. I will come back to the specific points the Deputy raised, because they are very important, but I will take the last point as an example and knit it into the broader discussion we have had today about project governance.

We have a very effective and robust project governance arrangement in place for the national broadband plan. I refer to a formal project plan setting out critical paths, milestones, deliverables, resources, funding, risks and issues, steering groups with the appropriate governance, financial, administrative and technical expertise, checkpoint meetings, risk and issue management and change request systems.

To pick up on the point raised [earlier] there is a reference to regular reporting to senior management. I am briefed on this very regularly. I have two meetings scheduled, for tomorrow and Monday, to go through some of the funding and cost-benefit analysis issues. The Minister is briefed on a very regular basis and is very much in command of where the project is at and where we need to go.

Obviously, we discuss it at the management advisory committee meeting we have with the Minister every four weeks. We also buy in external expertise to advise on key aspects of some of the projects, such as the CBA stuff, funding options, procurement and so on.

Deputy John Deasy: That was going to be published in July. Is that correct?

Mr. Mark Griffin: It is still on track. The intervention strategy is to be published in July for the consultation process. Work on the issues around funding, the cost-benefit analysis, the ownership model and all the technical work is under way and nearing completion. The intention is to go to tender towards the end of this year, with the first elements of the roll-out to commence in 2016, with the aim of completing the project in 2020.

As the Deputy knows - he is very familiar with the maps - one is talking about the intervention area the Government has to manage, covering 96% of the land mass of the country. It covers approximately 750,000 properties. If my memory serves me correctly, there are about 80,000 farm holdings within that. This is a big prize; it really is.

I have a number of key priorities that the Department will be dealing with over the next couple of years. I would set that up as among the top one or two. All the resources that are required in the Department to deliver that and any external resources we require to back us up are being put in place.

I am very comfortable about the governance arrangements in place for the management of the project. A very significant block of work that we have commissioned from external consultants concerns what governance arrangements need to be in place for the project for the five-year period. Also to be determined are the governance arrangements that need to apply, perhaps for a longer period, over a contract term.

Deputy John Deasy: Some of this was dependent on European Investment Bank, EIB, funding. What is the story with that?

Mr. Mark Griffin: We are looking at a range of funding options. We have a commitment of €75 million from the ERDF and we have been in touch with the EIB. We had been in touch with the Ireland Strategic Investment Fund and we have also been in touch with external private commercial lenders, as have some of the companies. Therefore, all that work is ongoing.

Deputy John Deasy: In rolling this out, Mr. Griffin is talking to funding entities, but he has not reached any resolution with them. I refer to the EIB, the Ireland Strategic Investment Fund and private equity.

::: Mark Griffin, Secretary General, Dept of ECNR

Mr. Mark Griffin: I expect that to come to closure over the next couple of months. Obviously, we will need to be in discussion, as we are, with the Department of Public Expenditure and Reform in the context of the Estimates and multi-annual capital programme in relation to whatever level of Exchequer investment is required to fund the programme.

Deputy John Deasy: People have been let down time and again over the past ten years, particularly in the area I am from, which is rural Waterford. I worry when I hear Mr. Griffin saying the funding has not been put in place for something that has been announced.

It has been announced that it will be completed by 2020. This is a fair point. We are dealing with public money here and talking about public expenditure and reform. There is no funding secured for this project as of now beyond what the Department of Public Expenditure and Reform will give.

Mr. Mark Griffin: Beyond what the ERDF has committed to. There is strong Government backing for this project. Before the final-----

Deputy John Deasy: That is not quite what I asked.

Mr. Mark Griffin: I know that.

Deputy John Deasy: This is important. I am asking questions that I am not sure I can answer any longer.

Mr. Mark Griffin: Yes.

Deputy John Deasy: I have been asking them for far too long. There is too much riding on it. As Mr. Griffin said, this project is his priority as Secretary General for the next few years. This is why I am asking him about this. It is defining in regard to his role in the Department. We do not have the funding in place to roll this out right now.

Mr. Mark Griffin: There is a block of work to be completed first regarding the estimated overall cost of the intervention. In parallel with determining that, we need to assess what the available funding options are. Some of that will be commercial through the EIB, potentially through the ISIF, and obviously the companies that bid will place a strategic value of the investment.Deputy John Deasy: There is no guarantee that they will tender.

Mr. Mark Griffin: I have no doubt whatsoever that they will. Our contacts suggest there will be a strong level of interest in it.

Deputy John Deasy: What is the problem with the strategic investment fund? It is well publicised these days. It is so under-subscribed it is not funny. There is a fund of €5 billion or €6 billion, but very little of that - just over €104 million - has been taken up. What is the problem in accessing the funding?

Mr. Mark Griffin: I do not believe there is an issue. Obviously, the fund will lend on commercial terms and will want to make sure all the i's are dotted and t's crossed in terms of the work we need to complete to feed into that.

However, that work is very well advanced. We have a number of draft reports from the consultants at this stage which should allow us to close out substantively on aspects of that.

Deputy John Deasy: The Department is finishing its intervention strategy in July.

Mr. Mark Griffin: Yes.

Deputy John Deasy: It is meeting the companies in the meantime.

Mr. Mark Griffin: We meet companies on an ongoing basis.

Deputy John Deasy: Given my perspective on the Department, my understanding of what we are dealing with today and the fact that I agree with Mr. Griffin as far as the historical issues are concerned, I believe this project is the big issue and the big-money item that the Department will be dealing with for the next four or five years. It worries me slightly that the funding is not in place yet for something that has been announced many times. We should keep tabs on this.

Mr. Mark Griffin: In any project, there are several stages of planning before the final commitments around a number of things. I would like to think we have the bulk of the planning work done and that, over the next few months, we will be in a position to call it in relation to some of the key issues the Deputy has outlined.

Deputy John Deasy: The physical roll-out of this was planned for late 2016. Are we on track with regard to the beginning of that physical roll-out?

Mr. Mark Griffin: Yes.

Deputy John Deasy: Will it be late, middle or early 2016?

Mr. Mark Griffin: Realistically, we are talking about the second half of 2016.

Chairman: The Department is before us in three weeks' time.

Mr. Mark Griffin: The committee will have many more opportunities to quiz me on this and a range of other things.

::: John Deasy: led aid oversight delegation to Vietnam - a trip that also explored the potential for trade

PAC Meeting: April 2, 2015

[Extract]Deputy John Deasy: The essential part of this for the past ten years has been the money we put into Irish Aid and the systems within the Vietnamese Government's structures of accounting for that. We felt comfortable about its practices but that will be part of the report we do and the findings.

It probably should be mentioned that a director from the Comptroller and Auditor General's office accompanied us to go through the controls within the Vietnamese Government's systems. That will be part of the report we compile. It is important because this involves a great deal of money. That should be included as well...

I will develop the trade element... particularly the export of dairy products. The current value of Irish dairy exports is €1.6 billion, but the market for liquid milk and milk ingredient products in Vietnam is worth $6 billion.

That market has not been tapped into by Ireland in any great shape or form. It became an inescapable fact that much work needs to be done in this area. A lot has happened since we returned home.

The draft report has been compiled and will issue to members in due course. We came to the conclusion that we need more personnel from Bord Bia and Enterprise Ireland on the ground in Vietnam.

With the ending of milk quotas and the free trade agreement being hammered out between the European Commission and the Vietnamese, this is timely. We have had conversations with the Minister for Agriculture, Food and the Marine since our return.

He has spoken to the Department of Public Expenditure and Reform and agreement has been reached to fund additional personnel in emerging markets.

The Minister has agreed in principle to use some of that money to fund an individual from Bord Bia in Vietnam to promote the food and dairy industries specifically. From that standpoint, the work we did with the embassy will bear some fruit.

It became inescapable after being there just for a few days the kind of market that has begun to open in Vietnam, with a lower middle class income range emerging there.

It is important we spread our risk effectively when it comes to the dairy industry outside China. The free trade agreement that will be hammered out between the European Commission and Vietnam does not just affect Vietnam but also acts as a gateway to the Association of South East Asian Nations, ASEAN, countries, with a population of approximately 630 million people.

The Kerry Group has been working in Vietnam and will make an announcement when it comes to a very tiny slice of the milk industry there. It has a collaboration with an indigenous company and that is really the first kind of enterprise that has taken hold in Vietnam with an Irish-owned company.

Bord Bia's presence is in Shanghai in China and the comment or criticism from people we met in business circles dealing with food is that all our bets seem to be placed in China.

As a result of what is happening in south-east Asia, the idea is that we need to create a presence outside China. In many respects, Vietnam is the engine in south-east Asia and those people believe strongly that the presence should be in Vietnam.

There is also an issue with regard to where the embassy is located. The commercial hub of Vietnam is Saigon or Ho Chi Minh City and not Hanoi. That is also significant.

There is some precedent in the agricultural sector. The pork market was opened and exports began in 2014. Work has been done within the Department in that regard.

When it comes to the initial step, the timing is right for that funding of an individual or individuals in Vietnam. As we learned, the most significant groundwork for contacts within official and government circles has been done over the past ten years.

It has taken that long for our officials in the embassy to create a very substantial and solid contact network within government circles. The timing is right for these kinds of initiatives because of contacts made over the past ten years.

I will not be mealy-mouthed about the fact that we have helped programmes through Irish Aid over the past ten years and, as a result, this has allowed us access to government circles.

That has proved very productive with respect to government officials and politicians understanding Ireland a little better. We should capitalise on that, and there is a need for us to use those contacts in an area like food and dairy.

That is the conclusion everyone reached, including us, the embassy and the Department of Foreign Affairs and Trade.

Since our return, that issue has been solidified, and I believe it will result in additional personnel from Bord Bia being funded to go to Vietnam.

For that reason, it was a positive trip.

Chairman: I welcome the report. I will ask the clerk to change the foreword to reflect the fact that Deputy Deasy and others contributed in the way they did. I ask that we do some form of press presentation. We can send out a press release and flag the success of the delegation and what has transpired since it returned.

In light of the fact we give €12.25 million in aid, it is important for us to have the right structures to monitor that spend. As has been proven in Vietnam, the structures are there and are being used by other countries which are delivering aid in Vietnam.

From a trade perspective, I cannot agree more with Deputies Deasy and Costello in that having a presence in the country is very important. It can take many years for a business to build a relationship with a partner in parts of Asia and that requires a lot of investment.

The Government should invest, first and foremost, and put its foot forward because having a presence in Vietnam is essential. This is especially relevant when we consider the Chinese economy, which has many advance factories built in Vietnam.

The Chinese are looking at that market and their presence there. All that is based on the cost of labour. It is important, therefore, for us to be in the middle of that economic activity.

Having people on the ground means they might look at the markets other European countries are exploiting such as Taiwan. We have raised this previously with various Departments that have appeared before us.

I am delighted the Deputy managed to visit some schools and industry and that he met some project leaders on the ground, which was very important. As was the case in other visits, time was taken to look at the disability and research sectors.

I support Deputy Costello's view on trade missions. It is important we have a full trade mission to Vietnam. I thank Deputy Deasy and the other members of the delegation for their work there and their work since they returned. We should continue to highlight the aid programme and the strong possibilities for trade as we do our work.

We are now in a position to report on the fishery harbour centres... With regard to the individuals in business whom we met at Howth there are significant questions regarding a number of matters that we need to deal with in the context of our report.

While that may be the response of the Department it certainly falls way short of what is required with regard to the response that the business people in that locality are asking for.

From looking at the different sites there the response falls far short of what a commercial operator might do in terms of the development of Howth.

There are lots of issues still to be dealt with and we can deal with these issues in the context of the report and raise the fact that there are many other issues at ports around the country of which we are aware... The State has a lot to learn from the commercial world which it seems to continue to ignore.

Members will have input in the report as a result of our visit that day. I ask that we would pay particular attention to it because it is probably the best example I have seen to date of poor practice and poor commercial insights or poor commercial knowledge on the part of the State.Deputy John Deasy: I agree with the Chairman in so far as Howth is concerned and it is hard not to agree. The situation might not be as bad with regard to the other State ports.

I did some checking with regard to Dunmore East where there are some vacant buildings and they are looking for leaseholds. There is a difference of opinion among people who actually use the port as to the utilisation of certain buildings within the port but certainly it would not be as bad as Howth.

I am not familiar with the situation in the other four State ports but I spoke to the Minister about this after we had visited Howth. I think it is fair to say that he has an open mind with regard to what the committee might report on.

My question is as to where we are going with this report. Are we going to suggest that another State agency be involved in these properties to assist the Department when it comes to the utilisation of the vacant buildings?

Sometimes if one takes an adversarial attitude with the Department, one will not get anywhere, but there is probably an opportunity to get something done here. That is the attitude that was registered. What direction does the committee plan to take with regard to the buildings?

Deputy Joe Costello: ...Five properties in Howth not currently in use are subject to legal, operational or planning considerations. I suggest that we request a breakdown of the category of consideration, whether legal, operational or planning and the nature of the difficulty. Such further material would be very useful before we make recommendations as to how to move forward.

Chairman: In reply to Deputy Deasy's question, we visited Howth and we have had a hearing with the Department. We will set out what we found and we will make recommendations arising from the input of members. As with other reports we will set out our findings followed by our recommendations. We will have a draft report in a couple of weeks with some recommendations. The members can then decide on the tone and extent of the report.

Deputy John Deasy: From my cursory conversations with the Minister, Deputy Coveney, I think there is probably a willingness to deal with it. There is probably an agreement that, in many cases, some of these buildings are vacant for too long and the processes involved are too lengthy. If we were to collaborate with the Department I think some progress would be made.

Chairman: The same applies to Killybegs. If there was a collaborative effort and a willingness to co-operate, there might not be the conflicts between the Department and individuals.

Perhaps the Minister should reconsider the action being taken by the Department in relation to that particular case. We should make that suggestion to the Minister, in view of his willingness, as mentioned by Deputy Deasy. I think we should test his willingness.

"I had meetings with the Minister for the Environment, Community and Local Government who had drafted the Act, but what I said fell on deaf ears. I now realise that he probably had his mind made up before that debate started on town councils."

PAC Meeting | March 5, 2015

Deputy John Deasy: I hope the Chairman will give me some latitude on this. This document arrived in our pigeonholes this morning. It is the annual progress report on the public service reform plan from Mr. Watt's Department. I find the section on performance and accountability, local government, interesting because-----

Mr. Robert Watt (Secretary General, Department of Public Expenditure and Reform): E-government or local government?

Deputy John Deasy: Local government, and it is slightly non-germane to what this meeting is about, but I will get to that.

Considering the comments that Mr. Watt's boss, the Minister [Brendan Howlin], made in recent days about the abolition of town councils being a mistake, the accountability and performance part of this document refers to the National Oversight and Audit Commission for Local Government, which undermines that to some extent.

It states the national oversight and audit commission for local government will do a list of things but that it was mistake to do this in the first place. The funny thing from my perspective is that Mr. Watt might be right, but it needs to be spelled out what exactly the national oversight and audit commission for local government will do.

There is a relationship with the Committee of Public Accounts because one of its roles will be to engage in financial scrutiny of revenue collection across the 31 local authorities to see how efficient it is. That is of relevance to the committee, but is there a contradiction?

The Minister and the Department issue a document such as this which states, effectively, that it was a mistake to abolish town councils. I think, therefore, that Mr. Watt might be right. I had meetings with the Minister for the Environment, Community and Local Government who had drafted the Act, but what I said fell on deaf ears.

I now realise that he probably had his mind made up before that debate started on town councils. I took my own town council in Dungarvan as an example - its staff, the town clerk in particular, were outstanding - and what I knew would happen when he left when it came to local administration is happening.

What exactly will the national oversight and audit commission do because already I see the cracks when it comes to services provided when town councils were in place? I am thinking, in particular, about housing and the way people are dealt with from Dungarvan to Waterford city. The consideration necessary when it comes to dealing with individuals and their families is missing.

Mr. Robert Watt: I did not get a chance to read the Minister's comments. In referring to town councils what I think he said was that he had regrets. I do not think he was making any comment about implications for the audit office or the oversight group being established. He was making a point about town councils because I am sure he supports the new-----

Deputy John Deasy: One does lead to the other.

Mr. Robert Watt: He supports the architecture put in place by the previous Minister, former Deputy Phil Hogan. He supports achieving more value for money and undertaking more assessments. I do not know whether there is a crossover from his views on town councils to the other, but he may clarify his comments.

The Deputy can ask him at a future date what he had in mind. I can speculate on his motives for making the comments, but it is beyond my remit. We are still friends and I would like to keep it that way, as long as we can manage it.

I do not see an issue in terms of the structures in place. The Chairman probed me on this question in the past and there were issues around the independence of the local government audit service within the Department of the Environment, Community and Local Government and whether it should be merged with the Office of the Comptroller and Auditor General in a new office and the need for greater oversight in this space.

I will support whatever mechanisms are required to ensure the achievement of value for money is pursued and that things are done properly. As the Deputy knows better than I do, the biggest reform introduced concerns how the vast majority of the money spent at local level is raised.

Over time, presumably, this will lead to councillors having much more oversight of what is going on within local authorities because they will be saying to ratepayers and property holders that they are paying to them; therefore, they will have to account for it.

Deputy John Deasy: I understand that; that is exactly what I am getting at. Mr. Watt knows that we have talked about rates during the years. It is devolving power to local authorities so far as revenue collection in their own areas is concerned.

Mr. Watt is announcing that this is happening around the country, but will he talk about the quality of the service provided, regardless of whether there are revenue raising powers locally?

What I have seen to date is a dip in the quality and level of service provided. I do not know what is within the remit when it comes to making a determination on how successful the change has been in the services provided for ratepayers and ordinary citizens, but that is an issue that needs to be looked at. How else is one going to find out if it is working?

Initially I advise that we survey ratepayers and ordinary citizens who have been subject to the change and speak to Deputies and Senators because they deal with the issue every day in their offices to find out if it has worked. What the Minister said might have been a political statement to a certain extent, but we need to revisit the issue if it is found that the service has reduced.

::: Robert Watt: questioned by John Deasy TD

Mr. Robert Watt: One of the roles of the oversight group is to look at benchmarking across local authorities. Unlike other parts of the public service, there are many entities which provide comparable services.

I know that they are different as one cannot compare Dublin to County Leitrim or Dublin to County Waterford, but there should be a way to benchmark the cost and quality of services provided. One of the roles of the group, as I understand it, is to do this and, to an extent, respond.

If a different service is provided in Waterford with which people are dissatisfied, it might indicate where there is room for improvement. I am not exactly sure where we stand on this issue. If the Deputy wishes, I will come back to him and see what the remit is and what it is doing.Deputy John Deasy: Yes. May we have a short passage on what thematic reviews of local authority function mean? The only point I am making, even though I might agree with the Minister, Deputy Brendan Howlin, is that there is a slight contradiction and a subtle undermining of what those on the commission might be tasked to do, while at the same time saying the abolition of town councils was a mistake.

Spelling out the role of the group and how it will perform its functions and come to conclusions is important because I already see cracks since the town councils were abolished.